Two-step flow of communication
The two-step flow of communication or Multistep Flow Model, says that most people form their opinions under the influence of opinion leaders, who in turn are influenced by the mass media. So according to this model, ideas flow from mass media to opinion leaders, and from them to a wider population.
Also known as the Multistep Flow Model is a theory based on a 1940s study on social influence that states that media effects are indirectly established through the personal influence of opinion leaders. The majority of people receive much of their information and are influenced by the media secondhand, through the personal influence of opinion leaders.
The Multistep Flow Model says that most people form their opinions based on opinion leaders that influence the media. Opinion leaders are those initially exposed to a specific media content, and who interpret it based on their own opinion. They then begin to infiltrate these opinions through the general public who become "opinion followers". These "opinion leaders" gain their influence through more elite media as opposed to mainstream mass media. In this process, social influence is created and adjusted by the ideals and opinions of each specific "elite media" group, and by these media group's opposing ideals and opinions and in combination with popular mass media sources. Therefore, the leading influence in these opinions is primarily a social persuasion.
The two-step flow of communication model hypothesizes that ideas flow from mass media to opinion leaders, and from them to a wider population. It was first introduced by sociologist Paul Lazarsfeld et al. in 1944 and elaborated by Elihu Katz and Lazarsfeld in 1955 and subsequent publications. Lowery and DeFleur argue the book was much more than a simple research report: it was an effort to interpret the authors' research within a framework of conceptual schemes, theoretical issues, and research findings drawn broadly from the scientific study of small groups  Unlike the hypodermic needle model, which considers mass media effects to be direct, the two-step flow model stresses human agency.
According to Lazarsfeld and Katz, mass media information is channeled to the "masses" through opinion leadership. The people with most access to media, and having a more literate understanding of media content, explain and diffuse the content to others.
Based on the two-step flow hypothesis, the term “personal influence” came to illustrate the process intervening between the media’s direct message and the audience’s reaction to that message. Opinion leaders tend to be similar to those they influence—based on personality, interests, demographics, or socio-economic factors. These leaders tend to influence others to change their attitudes and behaviors. The two-step theory refined the ability to predict how media messages influence audience behavior and explains why certain media campaigns do not alter audiences’ attitudes. This hypothesis provided a basis for the multi-step flow theory of mass communication.
Lazarsfeld and Katz
Paul Lazarsfeld and Elihu Katz are considered to be the founders of functional theory and their book Personal Influence (1955) is considered to be the handbook to the theory.
Paul Felix Lazarsfeld
One of the first to embark on Communications research, was the first to introduce the difference between 'administrative research' and 'critical research' in regards to the media. Critical research he believed, criticizes the media institutions themselves for the perspective ways they serve dominant social groups. Critical research favors interperspective and inductive methods of inquiry.  Lazarsfeld's study of the 1940 presidential election was published as The People's Choice (1944). During the research revealed information about the psychological and social processes that influence voting decisions. The study also uncovered an influence process that Lazarsfeld called "opinion leadership." He concluded that there is a multistep flow of information from the mass media to persons who serve as opinion leaders which then is passed on to the general public. He called this communication process the "two-step flow of communication." 
A professor in the School for Communication at the University of Pennsylvania collaborated in 1955 with Lazarsfeld, in research to observe the flow of influence at the intersections of mass and interpersonal communication and wrote their book Personal Influence Katz pursued Lazarfeld's research in a study of the flow of information. This is the basis of Personal Influence. Katz and Lazarsfeld concluded that: ... the traditional image of the mass persuasion process must make room for 'people' as intervening factors between the stimuli of the media and resultant opinions, decisions, and actions." 
Published Works on the Theory
The People’s Choice
The presidential election 1940 questioned as to whether President Franklin Roosevelt would seek his third term in office. Funded by grants from the Rockefeller Foundation, Life magazine, and the pollster Elmo Roper, Columbia’s Office of Radio Research conducted a kind of study of voting. It was based on a panel study of 2,400 voters in Erie County, Ohio. Paul Lazarsfeld, Bernard Berelson, and Hazel Gaudet supervised 15 interviewers, who from May–October interviewed the strategically selected 2,400 members of the community several different times in order to document their decision making process during the campaign. They focused on what factors would influence their decisions as the campaign progressed. The People’s Choice, a book based on this study presented the theory of “the two-step flow of communications,” which later came to be associated with the so-called “limited effects model” of mass media: the idea that ideas often flow from radio and print to local “opinion leaders” who in turn pass them on to those with more limited political knowledge "opinion followers." The conclusion of the research explained that sometimes person to person communication can be more effective than traditional media such as newspaper, TV, radio etc. This idea developed further in the book Personal Influence.
In 1944, Paul Lazarsfeld contacted McFadden Publications in regards to his first book, The People’s Choice. The two collaborated forming a mutually beneficial partnership in which Macfadden saw a way to financially profit from advertising to the female population and Lazarsfeld saw a way to gain more information on social influence . Out of this came the study conducted by the Bureau of Applied Social Research in which 800 female residents of Decatur, Illinois, where interviewed through panel interviews to discover what and who primarily influenced their decision making. Lazarsfeld worked with Robert Merton and thus hired C. Wright Mills to head the study. Another part of the research team, Thelma Ehrlich Anderson, trained local Decatur women to administer surveys to targeted women in town. By 1955. the Decatur study was published as part of Elihu Katz and Lazarsfeld’s book Personal Influence. The book concluded that ultimately, face to face interaction is more influential than traditional media influence and thus confirmed the two-step flow model of communication.
The original two-step flow hypothesis—that ideas flow from the media to opinion leaders and then to less active sections of the population—has been criticized and negated by myriad consequent studies. Findings from Deutschmann and Danielson assert, “we would urge that the Katz-Lazarsfeld two-stage flow hypothesis, as a description of the initial information process, be applied to mass communication with caution”. They find substantial evidence that initial mass media information flows directly to people on the whole and is not relayed by opinion leaders.
Furthermore, the two-step hypothesis does not adequately describe the flow of learning. Everett Rogers’ “Diffusion of Innovations” cites one study in which two-thirds of respondents accredited their awareness to the mass media rather than face-to-face communication. Similarly, critics argue that most of Lazarsfeld’s findings pertain to learning factors involved with general media habits rather than the learning of particular information. Both findings suggest a greater prevalence of a one-step flow of communication.
However, Lazarsfeld’s two-step hypothesis is an adequate description to understand the media’s influence on belief and behavior. Troldahl finds that media exposure is a first step to introduce discussion, at which point opinion leaders initiate the second-step flow. These findings also realize opinion leaders decisive role in the balance theory, which suggests that people are motivated to keep consistency among their current beliefs and opinions. If a person is exposed to new observations that are inconsistent with present beliefs, he or she is thrown into imbalance. This person will then seek advice from their opinion leader, to provide them with additional cognitions to bring them back into balance.
- Baran, Stanley. "Theories of Mass Communication". Introduction to Mass Communication. McGraw Hill. Retrieved July 2011.
- Katz & Lazarsfeld (1955). "Personal Influence". New York: Free Press.
- Staubhaar, LaRose, Davenport (2009). Media Now. Belmont, Ca: Wadsworth Cengage Learning. pp. 415–416. ISBN 978-0-495-56595-6.
- Paul Felix Lazarsfeld, Bernard Berelson, Hazel Gaudet, The people's choice: how the voter makes up his mind in a presidential campaign, Columbia University Press, 1944, p. 151ff
- Elihu Katz and Paul Felix Lazarsfeld, Personal Influence: the Part Played by People in the Flow of Mass Communications, 1955. ISBN 1-4128-0507-4 (new edition), p. 309ff
- Elihu Katz, "The Two-Step Flow of Communication: An Up-To-Date Report on a Hypothesis", The Public Opinion Quarterly 21:1 (Spring, 1957), pp. 61-78. at JSTOR
- Lowery & DeFleur, "Milestones In Mass Communication Research" Personal influence: Two-Step Flow of Communication, Longman Inc., 1983, p.179
- "Two Step Flow Theory." Opleidingswebsite Communicatiewetenschap (CW) En Communication Studies (CS). Unitveristy of Twente, 9 Sept. 2004. Web. 11 Apr. 2010. <http://www.cw.utwente.nl/theorieenoverzicht/Levels%20of%20theories/macro/Two-Step%20Flow%20Theory.doc/>.
- Staubhaar, LaRose, Davenport (2009). Media Now. Belmont, Ca: Wadsworth Cengage Learning. p. 404. ISBN 978-0-495-56595-6.
- "Paul F. Lazarsfeld Biography". Book Rags Inc. Retrieved July 2011.
- Kats & Lazarsfeld (1955). "Personal Influence". New York: Free Press.
- "THE ERIE COUNTY STUDY (The People’s Choice)". Media Research of the 1940s.
- "THE DECATUR COUNTY STUDY (Personal Influence)". Media Research of the 1940s.
- Troldahl, Verling C. "A Field Test of a Modified "Two-Step Flow of Communication" Model." Public Opinion Quarterly 30.4 (2001): 609-23. Academic Search Premier. Web. 11 Apr. 2010. <http://web.ebscohost.com>.